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Hi J, Re: Energy Sector blues..................
I noted in this week's Value Line's "Worst Performers - latest 13 Weeks" list that of the 41 stocks listed 20 are from general Energy sectors. That has always spelled "Oversold" to me in the past. Those 20 companies are over-represented as bad boys out of VL's 1700 stock universe.
Now, not all of those companies are screaming buys but studying the energy sectors for the best of the lot in an over-sold group usually will yield a few very good companies. And, starting positions when the sector is out-of-favor certainly helps to improve intrinsic value at the time of purchase.
Here's some LPs on the "worst" list right now:
OKE, PSXP, PAA and SHLX
Here's some of the rest of the "energy" stocks:
NBR, OXY, PBF, HP, MRO, FANG, PTEN, OII, WPX, HFC, DK, TRGP, CVI, HLS and PSX
These companies are all singing in harmony "Nobody Loves Me".........
Best wishes,
OAG Tom
It's great hearing from you!
I did an ACH this morning in the amount of $5,000. Hoping to continue adding EPD but I refuse to pay more than my cost basis which is currently $16.95 on 1,144 units. I'm so certain we're dramatically undervalued thatI'm finding it difficult to hold back. But I'm determined to do so.
I've "worked" EPD before and always make out handsomely. I'm supremely confident.
My best to you and this board, and especially good guy pete807 who is as steady as they go.
For what it's worth, I'm thinking we'll trade at $23 to $25 something in the coming months. Covid-19 and politics may hold things back for now but these, too, shall pass. Meanwhile, I like receiving a quarterly allowance along with the enormous size of this MLP.
A toast, then---to EPD and all of us smart enough and fortunate in being in position to invest.
I tossed another fish net out at $16.79 as a limit order this AM. Looks like the price is moving up away from my GTC.
Best wishes,
OAG Tom
People are crazy to sell so cheaply but I realize it could be necessary to keep food on the table.
I've been adding at $16.83 and thereabouts.
Verrry pleased.
luv epd with a big core to sell calls against, roll out and collect more, plus solid payout on units. Why not ET right here? bidding a lot at 5.5...
Good plan Tom. I don't think it gets to 16 again anytime soon, but would also buy if it does. Never got close between May/August mid Q dip that is money going to work rather than sleep like every mid quarter.
Signs are pointing to an energy surge in late 2020 and there is still time to swing trade EPD. Possibly even twice. I like that it is very liquid and strong with best of class management, market respect that is well deserved.
EPD has a very large following for all the right reasons.
-pete
,
How well I know. Just funnin.'
Have been adding to my position, now up to 700 units and more to go.
Hi J,
We're just here sipping the same flavor Cool-Aid!
OAG
Zounds!
So you're gonna rob pete807? Who dis heah Paul? You two got a room somewhere?
How unreasonable---he's our fave moderator, it's not like he's getting paid too much, ya know?
lol
Hi Pete,
Any time EPD yield rises above 10% yield it gets my blood flowing. I purchased an
additional 12% more shares a month ago at $17.60 so am looking for a bit
more discount for my next buy. That puts my 'next buy' target somewhere
under $16.
My EPD is in a retirement account so my reserve of cash is spread around to
11 different stocks. I'll have to rob Peter to pay Paul for the next IPD
buy. I'd accumulated a lot of cash from AAPL incremental sales, so might
"share" cash from that holding.
OAG Tom
Tripled the free core for channel trading cash...
Relaunched my latest foray into the Land of EPD.
Started with 500 units at $16.885 so I'm pleased to be back on board.
Great investment vehicle and pays a decent allowance, quarterly.
Looking forward to more fun and gratification.
And always great to spend time with you.
Fear not this energy giants ability to reward and play these dips... I added 1000 units today
-pete
Hi WSR
Yes it has become a traders market now and in to the Fall it will be great for swing trading your faves.
I am keeping an eye on those NG plays for a clear uptrend and a low RSI. Our old favorite has to prove the underpromise over deliver model...IMHO.
EPD is my Bank... Old School thing
Keep in touch.
-pete
hey Pete 807...great to hear from you...gotta love these old boring stocks with good solid divis...glta!!!
Missed the bottom no one saw coming in March but added in April and took profit in July...
My current Buy/Sells are set... 17.01 will add and 18.70 will sell 20% each way... Pulled back to 60% short term trading/40% long term hold EPs position. Over double my core with a good cash position. I have 30% cash to swing trade the position between payouts as it can generate more profit even after the tax is paid than just passively holding.
Hoarding cash this month I expect a return to higher value 4th quarter. Currently Wall St is going silent trying to avoid the media anti-fossil fuel sentiment... Which will change as we roar back in the Fall and temps demand energy generation and consumption. Media has lost most credibility... They are no longer trusted. Election year hypocrisy
Natural gas is the energy of choice long into the rush toward a mythical green new technology that has not been invented and wont displace 300 million combustion engines in a foreseeable future. Good NG investments are making sense here.
As I always say EPD is boringly safe, but I would like it if reality came to the value side we energy guys see to a well run boring partnership.
GLTus!
-pete
Hi Pete,
I added 12% to my holding this AM at $17.60. Feels good so far.
OAG Tom
Or hold for 21+ years starting in the early 90s
This company needs no pumping as they are all about it,... pun intended.
"What's in your wallet?"
-pete
By the numbers:
7 Number of nuetral or better ratings: Research Team, New Constructs, Credit Suisse, The Street, CFRA, Ford, Market Edge.
9.8% Current dividend yield
21 Consecutive years..EPD increased the dividend.
$30.87 52 week high
July 30, 2020 x dividend date
July 29, 2020 Earnings.
Add these up: Strong Buy "at least" until July 30
Same here... nice yield btw!
Hi Pete, Re: EPD...................
I came across this quote:
Bill Gross at 83 . . "I’m COVID-19 free and just shot an 83 yesterday at my golf course. Happiness is a healthy body, sinking a few 10-foot putts, and investing in value, versus the “Fab 5”. I like EPD, MO, IBM and ABBV, to name a few. No guarantees!"
I'm holding firm and will add if we get another round of deep discounts.
OAG Tom
I was parking money here and still am as I added more today at 16.75.
Banks pay 1/100th interest as EPD. Only use a brick and mortar bank to pay local bills. Over 10% interest in the form of distributions here
Return of capital is very good and distributions are not impacting our income tax bracket. K-1s are no problem for an accountant to deal with. I leave the fine print to them.
Currently as retired folks consider there heirs, those gains will be removed and the cost basis stepped up to the day they inherit the stock. I got my original shares that way, and have added.
-pete
Added a few more today @ 20.87
I just watch the RSI and MACD so most of the chart talk is over my head. I just think as a long term believer in the management and founders philosophy still in place, it is the safest place to park money.
The opportunity to make short term profit is way more than the generous distribution IMHO. The price has been swinging so much daily a trader can win, and of course the period between payouts is the playground. Huge money invested here will come in to play close to the next payout, as it seeks the yield but works to justify fees managing others wealth in between.
We can use that to our advantage as retail investors managing our own.
Good luck and better trading.
-pete
Boy, Pete, let's hope the YoYo String doesn't break with all these gyrations.
OAG Tom
Nice dip today off trend back to the return to the channel $25-35 for EPD.
Doubled down over the last couple months here
Irresistible
https://seekingalpha.com/article/4352774-enterprise-products-partners-irresistible?utm_medium=email&utm_source=seeking_alpha&mail_subject=epd-enterprise-products-partners-irresistible&utm_campaign=rta-stock-article&utm_content=link-0
All will be good buys and pay for themselves over time easily..
I realize this company is not at all like most on this forum.
Maybe my single best place to park money and forget it.
GLTus!
Hi Pete,
I've not owned this long but it has been interesting. I've not included the dividends in this histogram, only cash and stock value along with trades.
I have about 14% more shares than when I started at this point and now there's a touch of cash back in the account should we get another bounce. Every dividend makes this a happier holding.
Best wishes,
OAG Tom
All you wise EPD followers can see the strength of a well run company here. I never have to question anything they do. We can leave it and not pay attention for periods, go fishing, do projects etc.
I have been lucky to add in the last couple months and felt strongly the channel would be revisited between $20-30.
Today even a small $18 add looks nice. $15 was a gift... Any who got 11s are to be envied!
IMHO the energy sector always swings more than expected both ways due to the many factors of starting stopping and discovery.
Energy independence is a great thing for America.
GLTA!
-pete
Thanks Pete,
Nice article and summary.
OAG Tom
I change specific transactions with Schwab if I want to avoid the wash sale on short term trades but only because I have been doing a lot of under 1 month plays on the rebound...
Otherwise I am High cost goes first with accounting, and minimize tax which has grown leaps and bounds.. I will attempt to stay under a 2 bracket change,,, Already jumped 1 for 2019, and ahead of the pace this year..
That's expected when you go from all in to 40% cash.
Core will remain EPD weighted.
10 years ago I learned some bit of the art of wise trading and avoiding many of the "hot" stocks here. No money in companies without revenue or debt too high. I am aggressive on what I find as lower risk plays.
No margin or options, and no short positions. Maybe I miss some $ but no stress..
Thanks for replies Tom,
-pete
Hi Pete,
My shares are in a retirement account, so even though I mentioned LIFO gains, the reality is there's no taxation for now.
I just look at LIFO as a method of discerning whether my investment management model is acting in a prudent fashion!
Best regards,
OAG Tom
Good move, We don't have a big following here but the company certainly does from both sides of Wall Street. Very liquid. Most of the articles support the South side, which favors the current admin.
I went to 40% cash overall which took a little time, so I missed the bottom but still have done super here. I will keep the new ones a yr at least and cut the gain to long term.
Good Investing to you sir!
Good morning Pete, Re: EPD March buying opportunity..............
I also added shares as the price staggered. This AM triggered a GTC Limit order I had in place to sell 10% of my holding at $19.25. That helped the sorely low cash reserve level I had for this holding. It also included a 42% LIFO gain on the shares. Now I can sit back and harvest dividends on the remaining 90% for now.
Best regards,
OAG Tom
Glad I added 30% on that sell off, EPD is rallying.
EPD is a solid core long investment.
Those that have followed it for years know it as one of the safest stocks long term that needs no constant attention, and distributes rising quarterly income free of government grab.
They could also change tax laws,... disguise their overspending by plucking low hanging fruit!
EPD will have to keep their lobbyists, whoever they are.
I think the new mind set will be about debt and balance sheet strength more than ever in a runaway Fed money printing/falling interest enviro.
At least the energy sector is safe into my grand kids lifetimes... The Green New DEAL is DOA. Long time Green Deal Global Warming loud mouth Michael Moore just produced a documentary admitting it, a 180 degree turn which is bringing much needed common sense to the subject, but heat to him.
In 100 years we will be using safe nuclear fission... and using fusion radioactive waste in the process. But for a long time in between a billion fossil fuel machines will be running.
Good plan! Just don't make that Stepped Up Basis too soon!!!
Tom
My extra units added will also be sold at a nice profit, keeping the free core for the eventual stepped up basis kids will get. I had to create dry powder in the same way which took a little more time. Good job on your trades!
I learned from this it is a good thing to have cash for a rainy day.
We should see a return to the channel indicated by all the charts. And break above IMO...
-pete
Nice uptick and the p/s is still well below the 26 week MA. I guess worrying about the Ex-Div discount would have been energy wasted!
I added 12% to the core position at $13.48 on 03/23/20 which seems to have been a fortuitous event. Cash had been depleted for this holding, so it was what I term a "black swan buy" - done with cash borrowed from other positions. With a 30% LIFO added on that buy price puts my 'black swan sell' price at $19.25. I'll let the same shares go at that price to repay Paul from Peter's borrowing.
Best regards,
OAG Tom
How about this for an unusual ex-day!
No surprise here though... we can sleep well with this one.
Thanks for the reply, Tom! It was logic, ... not ESP that EPD would reduce cap ex I posted yesterday. LOL
Good luck to all us EPD faithful!
Enterprise Products cuts $1B from 2020 capex budget
https://seekingalpha.com/news/3565934-enterprise-products-cuts-1b-from-2020-capex-budget?utm_medium=email&utm_source=seeking_alpha&mail_subject=epd-enterprise-products-cuts-1b-from-2020-capex-budget&utm_campaign=rta-stock-news&utm_content=link-3
EPD beats both GAAP and Non-GAAP
https://seekingalpha.com/news/3565815-enterprise-products-partners-eps-beats-0_02-misses-on-revenue?utm_medium=email&utm_source=seeking_alpha&mail_subject=breaking-epd-earnings&utm_campaign=rta-stock-news&utm_content=link-3
Thanks Pete, Re: Distribution..............
I'm always happy to clip another coupon. At today's double digit yield (VS current price/share) it will make my smile all the broader.
OAG Tom
We are officially ex dividend and earnings will be announced tomorrow (Wednesday) before the market opens. I will guess cap-ex is reduced and the market will like the company's report.
Anyone bid sitting needs to deduct the mandatory drop of .445 per share tomorrow morning. Your distribution is coming May 12th. I cancelled some bids that did not fill today...
I added 500 more in the mid 16s on Monday.
GLTA!
-pete
My sense tells me oil will swing back and with it bring EPD in line with the analyst values in the mid $20s plus more,... when the cabin fever virus is over. Demand will swing above the moth balled production supply. We are independent and secure.
Normally this parking place is all about the coupon, but now appreciation will be the real mashed potatoes and the distribution just the gravy!
Long since the 90s. That capital was already returned.
Added 300 today @ $15.32
GLTA!
-pete
Quite a month we just saw...
Last 30 days Low 10.27 (lucky buyer there) - High 17.57 ... insert pause here to reset for next leg up.
Not our normal channel,... but we will return to those mid twenties when our population gets released to do what they do.... use energy which is cheap at the moment. Good time to fill the strategic reserve, as we are doing.
I believe as it usually does, the energy supply/demand curve will swing past normal the other way due to a lot of equipment being in moth balls. You just can't turn on the tap... Summer will see a spike in travel if we are allowed, lol. Cabin fever was extended...
Also .... There will be some cheap assets acquired by conservative well run companies that keep lots of cash for just such times... Cap ex will be dialed back according and distributions will keep their slow pace of the steady 2 1/2% rise, while the ones who complained because EPD cut the rise back from 5% are now silent.
EPD is one of those rare bank like companies. IMHO
-pete
The combination of events is creating the perfect storm for EPD's long holders and new investors.
Potential short term upside in appreciation was certainly supported by that article, and most of the steady stream of similar opinion pieces. Notice the 5 year channel it traded in...
However long it takes normal will return which implies a rare 100% return to that channel, IMHO
Good management here has been the key to success for decades. Best of class. Their decision to only increase the distribution 2.5%, ...from 5% each quarter, and avoid secondaries was visionary now in hindsight!
-pete
3/20/2020 5 star rating Highlights:
The firm has built out a dominant position in natural gas liquids. Its Houston Ship Channel (where Enterprise has invested over $8 billion in the past few years) and Beaumont Terminal and its Mont Belvieu assets (NGL fractionation, storage, pipelines) means it will be the primary beneficiary as U.S. NGL exports increase in the coming years. We view the forthcoming NGL demand-pull toward the Gulf Coast as the key growth driver for Enterprise. From its vast NGL system, Enterprise's connection with every ethylene cracker on the Gulf Coast, its sold-out PDH splitter (and its second PDH plant is on the way), and the upgraded isobutylene unit make it adept at converting low-cost NGLs into higher value-added olefins.
In a more challenging midstream environment in 2020, the focus, in our view, will be on capital allocation. Enterprise has a massive $7.7 billion backlog of work, which will support growth over the next few years. Growth capital spending should fall to around $1.8 billion in 2021 from over $4 billion in 2019. Combined with minimal distribution increases, Enterprise will be in the highly attractive position of having excess cash after fully funding capital spending plans and distributions in 2020. If Enterprise chooses to fund half of its capital spending plans with debt, excess cash available for buying back units would easily surpass $1 billion annually. Yet, Enterprise has only announced around $130 million in planned opportunistic buybacks in 2020. Alternatively, if debt is not used as a funding effort, leverage will decline rapidly, and we estimate could be as low as 2.8 times debt/EBITDA by 2024.
We expect returns on invested capital to average about 11% over the next five years, well above the company's cost of capital of around 8% by our estimates.
A network of pipelines serving multiple end markets and supplied by multiple regions is typically more valuable than a scattered collection of assets. A pipeline network allows the midstream company to optimize the flow of hydrocarbons across the system and capture geographic differentials. Finally, it is typically cheaper for an incumbent pipeline to add capacity via compression, pumps, or a parallel line than it would be for a competitor to build a competing line.
Enterprise’s asset base quality is outstanding. For producers seeking options for their hydrocarbons, Enterprise offers an extensive menu. The partnership is connected to every major U.S. shale basin, every ethylene cracker, 90% of the refineries east of the Rockies, and offers export facilities out of the Gulf Coast. The heart of the asset base is clearly its NGL network, which is comprehensive and offers deep access to Mount Belvieu. Its regulated NGL network makes up 20,000 miles of pipelines across 27 states transporting over 1.8 million bpd. The unregulated assets include over 1 million bpd of NGL fractionation capacity, over 170 million barrels of storage, multiple export terminals with dock access, and isomerization units. To further its control over the NGL value chain, Enterprise has built out a number of petrochemical assets, including propylene pipelines, propane dehydrogenation (PDH), and isobutane dehydrogenation (iBDH) facilities, which allow the partnership to extract higher value olefins from feedstock. In effect, the firm is creating more of a demand pull for the ample supply of NGLs traveling through its network. Enterprise, in our view, was one of the first in the industry to recognize the shortage of NGL infrastructure in the U.S., and the eventual shift toward exports and has built an impossible-to-replicate collection of assets across the value chain, positioning it to capture differentials between U.S. and international markets.
Enterprise’s natural gas assets have been impacted by its considerable exposure to Eagle Ford and Haynesville where production is well off peak levels. Natural gas throughput at Enterprise has declined by about 10% since 2012, though it has seen some improvement in 2017 and 2018 off very low levels. Still, the impossible-to-replicate network makes up 12,000 miles of natural gas pipelines across New Mexico, Texas, and Louisiana with 400-plus interconnection points to demand centers as well as 5.8 bcf/d of net gas processing capacity. The vast majority of the network is in Texas, with 16 bcf/d of transport volumes and nearly 13 bcf of storage, which is about 80% contracted by our estimates. Enterprise has benefited more recently from its exposure to the Delaware/Permian basin, where rich gas volumes have more than quadrupled since 2013 by our estimates and the partnership has been added processing capacity to feed its existing asset base.
Enterprise’s 5,700 miles of crude pipelines are primarily located in Texas, Oklahoma, and New Mexico, connecting the Eagle Ford, Permian Basin, Cushing, and Gulf Coast exports hubs and transport about 1.8 million bpd. The firm also owns about 37 million barrels of storage. The reversal of the Seaway pipeline to flow oil to the Enterprise Hydrocarbons Terminal was a smart move, and the planned construction of a new pipeline transporting crude to Sealy (on the Coast) from Midland will strengthen the overall network. We’re particularly impressed with the partnership’s position on the Houston Ship Channel in terms of storage and export opportunities. The EHT controls 21 million barrels of storage with six deep-water dock ship and two barge docks, and can accommodate Suzemax tankers, which are the largest tankers that can navigate the channel. The firm also controls Beaumont West, Freeport, and Texas City systems, which adds additional dock access. We think the dock access is important, given geographic constraints, and it allowed the firm to export 34 million barrels of crude oil in 2016 following the lifting of the export ban in December 2015, as well as another 17 million barrels of processed condensate. Replicating Enterprise’s crude oil asset portfolio will be very difficult, in our view.
We view its marketing operations as a strong asset that lets Enterprise collect significant additional fees from its network versus being a pure toll-taker. With its marketing operations, Enterprise takes ownership of the hydrocarbon and seeks to exploit differentials based on time, location, or product arbitrage across the hundreds of connection points across Enterprise’s system. This type of asset is very difficult to replicate due to the complexity and richness of Enterprise’s system, and the few producers that do undertake marketing activities only focus on the relatively few basins they operate in versus the entirety of the U.S. oil and gas complex. It also lets Enterprise take full advantage of profitable opportunities in secondary markets across its pipelines for capacity not being used under firm contracts, versus ceding those fees to the shipper. Other examples would include taking advantage of seasonal changes in demand for propane, upgrade opportunities for raw NGLs to be converted to higher grade and more profitable olefins, and being able to use Enterprise’s network to move product to markets where differentials are the widest. Rather than operate as a separate group, the marketing operations are embedded within the natural gas, oil, and NGLs teams at Enterprise providing insights to help them make investments across the portfolio. Finally, we believe the marketing operations provide an added benefit in terms of sourcing and developing relationships with producers to serve as committed shippers for future investments but also sources of internal demand (e.g. opportunities to Enterprise to take ownership of hydrocarbons) to support incremental investments. Peers without this robust level of marketing operations will face higher hurdles in terms of being able to obtain commitments for large investments.
From a contract perspective, we have a favorable view. We estimate about 80% of Enterprise’s contracts are firm contracts by shippers to reserve capacity on Enterprise’s assets for a decade-long time frame, and the firm typically signs 15- to 20-year contracts for its pipelines. These industry standard contracts provide shippers with reserved capacity, for which they pay an origination fee, but do not obligate them to use the line if better opportunities exist elsewhere, for which the shipper would pay an additional transport fee. For Enterprise’s latest investments, which are the PDH plant, 100% of the 750,000 pounds per day are contracted for 15 years, and the iBDH plant is also fully contracted for 15 years, split between investment-grade companies and internal Enterprise marketing capacity. In times of market stress, we note that Enterprise has also been creative with its assets, obtaining area dedication contracts where the producers would be obligated to provide a certain number of barrels per day and then look to convert the contract to a long-term fee contract as the markets recover. We think this is supportive in terms of developing long-term relationships with important producers.
Fair Value and Profit Drivers | by Stephen Ellis Updated Mar 20, 2020
After updating our model to reflect lower capital spending levels in 2020 and 2021 and further fee and volume adjustments, we retain our $25.50 fair value estimate. Our fair value estimate implies a 2020 EBITDA multiple of 10.5 times, a 2021 enterprise value/EBITDA multiple of 10.8 times, and a 2020 distribution yield of 7%.
We expect the main driver for Enterprise will be its NGL segment, as the demand pull from the Gulf Coast and international markets lets Enterprise take advantage of the export opportunities and lucrative differentials via its comprehensive asset base. We also expect increased demand for ethane will benefit Enterprise as well, though to a lesser extent than peer Oneok, as Oneok’s fractionation plants have more underutilized capacity. However, the diversity of Enterprise’s asset base, its ability to take advantage of just about any profitable opportunity that appears in U.S. midstream, and its largely fee-based earnings stream all support healthy single-digit growth prospects over the next few years. We expect EBITDA to increase about 1% annually over the next five years and distributions about 1% annually on average over the same time frame.
Risk and Uncertainty | by Stephen Ellis Updated Mar 20, 2020
The single greatest risk to the Enterprise story is failure of demand for natural gas liquids from the petrochemical industry in the Gulf of Mexico to materialize. In addition to making up over 50% of the partnership’s gross operating margin today, Enterprise's NGL business will serve as its primary growth engine through the rest of the decade. We anticipate demand for ethane due to ethylene crackers under construction in the Gulf in the next few years. However, much of this demand is out of Enterprise's control. Any delays or reduced demand would have a materially negative effect on Enterprise's earnings. Even as much of the downside risk is mitigated by sufficiently contracted capacity, failure of NGL demand to materialize would cap Enterprise's earnings upside.
Enterprise holds some commodity price risk from both volumes and equity ownership of natural gas, crude oil, and NGLs. The partnership addresses some of this risk through hedges and its diversified asset base. We maintain that management’s efforts to vertically integrate insulates the business, proving natural hedges against much of the commodity price volatility. However, the main risk to Enterprise’s marketing business is a narrowing of spreads.
As with many yield-oriented investments, Enterprise is also exposed to interest-rate risk. If interest rates increase faster than expected, Enterprise units could underperform, as a steepening yield curve increases expected distribution yield for competing assets.
Enterprise’s executives, who represent some of the best and brightest in the industry. We see them as chess masters operating in an environment where everyone else is playing checkers. Beyond the depth of management’s experience in nearly every aspect of the energy and chemical industries, their consistent alignment with LP unitholders’ interests over time substantially differentiates them from their midstream peers. The continued participation (and reinvestment of approximately $100 million annually) from the Duncan family (the partnership’s original cofounder and general partner) in the LP is also a powerful endorsement. In 2018, the family added another $106 million in purchases in August on top of its expected annual $100 million contribution.
Leadership of Enterprise ceded from Michael Creel to Jim Teague in January 2016. Serving as COO since 2010 and with over 40 years of experience in the midstream and petrochemical industry, Teague is particularly well suited to the role (and one of the best managers of midstream assets in the industry). This has shifted to a co-CEO structure with Randy Fowler in 2020, a reflection of the way the pair has worked together for over two decades. The rest of the executive management holds similarly stellar credentials. The Duncan family also continues to preserve its legacy of sound stewardship, with Randa Duncan Williams, daughter of the partnership's late founder, chairing the board.
In a difficult industry environment, Enterprise has remained conservative and sensible stewards of capital. This is a tactical executive team that plays the long game. They retain sufficient distributable cash flow to reinvest in the business while limiting reliance on dilutive equity and debt capital market issuances. In particular, we view the Oiltanking acquisition in 2015 for a total consideration of $6 billion as a forward-thinking effort to capture growing export opportunities. In an industry that is more cyclical than most investors might have expected, we applaud Enterprise management’s prudent approach to achieving consistent, steady growth and returns. The recent achievement of self-funding the equity portion of its capital expenditure program a year ahead of schedule plus the announcement of a $2 billion unit buyback further cements the management team as worthy of our Exemplary rating.
Enterprise’s exemplary stewardship of its business mostly mitigates our concern about the limited rights of LP holders. Current governance structure affords LP unitholders almost no say in the management of the firm. As long as returns continue to grow and remain robustly above the cost of capital, we are willing to concede some control in corporate governance.
In Enterprise’s case, we continue to think the deep-seated apathy toward the firm is misguided, especially master limited partnership related concerns. Enterprise is unlikely to switch to a c-corp structure, given it can fund its spending program without issuing equity, and the need to issue equity to fund projects has forced similar conversions in the past, in our view.
I put in a bid 20% lower than the previous close and caught some at 12.00. What a panic to drop to 10. Morningstar has a great review of EPD. I glad to add some more to my collection.
Anyone get to grab some at that $10.33 floor yesterday? I sure missed this panic sell off. out of dry powder... $14.90 high today was the the start of the rebound today, imo...
The message is not lost on the older refiners I bet, that have yet to convert to flexibility of handling both Sweet and Sour crude.. Gulf Coast in particular... Big oil is not Exxon and Mobil...
read more:
https://spectator.org/getting-smart-with-the-strategic-petroleum-reserve/
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